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Published online by Cambridge University Press: 01 January 2021
Patent rights are recognized as a property asset with an attendant right to exclude. However, recent policy developments highlight that the right to exclude is not inviolable. This paper explores two rapidly evolving exceptions to patent exclusivity, both of which take the form of compulsory licenses. First, under the international Agreement on Trade-Related Aspects of Intellectual Property Rights (“TRIPS”), national governments can compel patent owners to out-license technology in service of greater good. These egalitarian compulsory licenses improve access to technology but undermine patent value. Second, compulsory licenses are increasingly relied upon as an equitable remedy in U.S. patent litigation. Typically referred to as “ongoing royalties,” these court-mandated compulsory licenses are a modern alternative to injunctions against adjudged infringers. TRIPS compulsory licenses and ongoing royalties arise under independent legal frameworks, but necessarily invoke parallel economic considerations. While the wisdom of each has been discussed at length by others, this paper explores principles of royalty determination employed in each context. Considering both frameworks, an analysis of where each succeeds and fails is provided, together with an exploration of optimized royalty frameworks.
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2 Id. at § 1.02(1)(b)(iv)[F]; see also Dolan v. City of Tigard, 512 U.S. 374, 384 (1994); Nollan v. Cal. Coastal Comm'n, 483 U.S. 825, 831 (1987); Kaiser Aetna v. United States, 444 U.S. 164, 176 (1979).
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4 U.S. Const. art. I, § 8, cl. 8.
5 See Ronald A. Cass & Keith N. Hylton, Laws of Creation: Property Rights in the World of Ideas 50 (2013).
6 See James Bessen & Michael J. Meurer, Patent Failure: How Judges, Bureaucrats, and Lawyers Put Innovators at Risk 5, 144 (2008) [hereinafter Patent Failure].
7 See id. at 16, 140, 152.
8 See id.
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23 Patent Failure, supra note 6, at 2-4, 47-54.
24 See eBay, 547 U.S. at 396-97 (Kennedy, J., concurring).
25 See Tyler, Neil S., Comment, Patent Nonuse and Technology Suppression: The Use of Compulsory Licensing to Promote Progress, 162 U. Pa. L. Rev. 451, 454 (2014)Google Scholar.
26 See id.
27 See id. at 461, 467-69; see also John R. Thomas, Cong. Research Serv., R43266, Compulsory Licensing of Patented Inventions 1 (2014) [hereinafter Cong. Research Serv., R43266].
28 See Tyler, supra note 25, at 461.
29 See, e.g., Cong. Research Serv., R43266, supra note 27.
30 See, e.g., Seaman, Christopher B., Permanent Injunctions in Patent Litigation After eBay: An Empirical Study, 101 Iowa L. Rev. 1949 (2016)Google Scholar.
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33 Brawner McCullen, Sharon, The Federal Circuit and Ninth Circuit Face-off: Does a Patent Holder Violate the Sherman Act by Unilaterally Excluding Others from a Patented Invention in More than One Relevant Market, 74 Temp. L. Rev. 469, 475 (2001)Google Scholar.
34 See Alomar-Jimenez, supra note 32, at 29-30.
35 See id. at 18, 21-22, 29-30 (discussing how both frameworks have some allowance for patent exclusivity violation where the violation increases social welfare).
36 Agreement on Trade-Related Aspects of Intellectual Property Rights art. 31 § h, Apr. 15, 1994, GATT 33 I.L.M. 1197; see also Cotter, Thomas F., Four Principles for Calculating Reasonable Royalties in Patent Infringement Litigation, 27 Santa Clara Computer & High Tech. L.J. 725, 727-28 (2010)Google Scholar.
37 See discussion infra Part IV.
38 See discussion infra Part IV.
39 See discussion infra Part IV.
40 3 Intellectual Property Rights: Critical Concepts in Law 25-27 (David Vaver ed., 2004) [hereinafter Intellectual Property Rights] (providing four translations of the Venetian decree of 19 March 1474).
41 Allen Nard, Craig & Morriss, Andrew P., Constitutionalizing Patents: From Venice to Philadelphia, 2 Rev. L. & Econ. 223, 234 (2006)Google Scholar.
42 Intellectual Property Rights, supra note 40, at 26.
43 Id. at 25-26. The terms new and ingenious mirror modern U.S. patent law requirements of novelty and non-obviousness, while utility expressly remains a requirement of U.S. patent law. 35 U.S.C. §§ 101-103 (2012).
44 Intellectual Property Rights, supra note 40, at 25-26.
45 See id. at 25.
46 See id. at 25-27.
47 Act of Apr. 10, 1790, ch. 7, 1 Stat. 109 (promoting the progress of useful arts).
48 United States v. Sherwood, 312 U.S. 584, 586 (1941) (stating that “[t]he United States, as sovereign, is immune from suit save as it consents to be sued”); see also Ellen Coster, Mary & Ghrist, Diane E., Intellectual Property Suits in the United States Court of Federal Claims, 10 Landslide (Special issue) 31 (2017)Google Scholar.
49 See Coster & Ghrist, supra note 48.
50 See id. at 31. Although this immunity did not historically extend to states, it may do so today.
Dernik, Nicholas, Note, State Sovereign Immunity: States Use the Federal Patent Law System as Both a Shield and a Sword, 8 J. Marshall Rev. Intell. Prop. L. 134, 136-37 (2008)Google Scholar (footnotes omitted) (stating that “[h]istorically, courts held states, like private citizens, liable for infringement of intellectual property rights,” but that “[c]urrently, the Eleventh Amendment precludes any party from bringing a suit against a state agency in federal court, and 28 U.S.C. § 1338 precludes the party from bringing any action relating to patents in any court other than a federal court. Therefore, these two laws insulate state agencies with unequivocal immunity from patent infringement claims.”); see also Landau, Michael, State Sovereign Immunity and Intellectual Property Revisited, 22 Fordham Intell. Prop. Media & Ent. L.J. 513, 515-16 (2012)Google Scholar.
51 Act of June 25, 1910, ch. 423, 36 Stat. 851 (providing additional protection for owners of patents of the United States).
52 28 U.S.C. § 1498 (2012) (“The court shall not award compensation under this section if the claim is based on the use or manufacture by or for the United States of any article owned, leased, used by, or in the possession of the United States prior to July 1, 1918.”).
53 Calhoun v. United States, 453 F.2d 1385, 1391 (Ct. Cl. 1972). Eminent domain in this context appears to function initially as a compulsory license with a rate determined at will by the government, and similar to TRIPS compulsory licensing, would be subject to the court's royalty determination approach upon challenge by patentee. See id.
54 7 U.S.C. § 2404 (2018); see also 35 U.S.C. § 203 (2012); 42 U.S.C. §§ 2011, 2183, 7608 (2012).
55 Schlam, Lawrence, Compulsory Royalty-Free Licensing as an Antitrust Remedy for Patent Fraud: Law, Policy, and the Patent-Antitrust Interface Revisited, 7 Cornell J.L. Pub. Pol’y 467, 470 (1998)Google Scholar; see also Mark Delrahim, Deputy Assistant Attorney Gen., Forcing Firms to Share the Sandbox: Compulsory Licensing of Intellectual Property Rights and Antitrust (May 10, 2004) (transcript available at https://www.justice.gov/atr/speech/forcing-firms-share-sandbox-compulsory-licensing-intellectual-property-rights-and) [https://perma.cc/Q8LV-4SM5].
56 Int'l Salt Co. v. United States, 332 U.S. 392, 401 (1947).
57 See 7 U.S.C. § 2404; 42 U.S.C. § 2183.
58 See 7 U.S.C. § 2404.
59 Paris Convention: Total Contracting Parties, World Intellectual Prop. Org., https://www.wipo.int/treaties/en/ShowResults.jsp?lang=en&treaty_id=2 [https://perma.cc/P6B8-UFDB] (last visited Jan. 28, 2020).
60 Paris Convention for the Protection of Industrial Property, Mar. 20, 1883, 21 U.S.T. 1583,
828 U.N.T.S. 305 [hereinafter Paris Convention]; see also Paris Convention for the Protection of Industrial Property art. 5(a)(2), revised and amended Sept. 28, 1979, 21 U.S.T. 1583, 828 U.N.T.S. 305 [hereinafter Paris Convention revised and amended Sept. 28, 1979]; Paris Convention for the Protection of Industrial Property, additional act concluded Dec. 14, 1900, 21 U.S.T. 1583, 828 U.N.T.S. 305 [hereinafter Paris Convention additional act concluded Dec. 14, 1900]; Arpad Bogsch, Int’l Bureau of Intellectual Prop., The Paris Convention for the Protection of Industrial Property from 1883 to 1983, 36-37 (1983); Trimble, Marketa, Patent Working Requirements: Historical and Comparative Perspectives, 6 U.C. Irvine L. Rev. 483, 488 (2016)Google Scholar (noting that US. patent holders have never been subject to working requirements, with the exception of a brief period from 1832 to 1836 during which foreign patent owners, but not U.S. national patent owners, were subject to restrictive working requirements).
61 Paris Convention additional act concluded Dec. 14, 1900, supra note 60; Bogsch, supra note 60.
62 Bogsch, supra note 60.
63 Paris Convention for the Protection of Industrial Property, opened for signature Oct. 31, 1958, 21 U.S.T. 1583, 828 U.N.T.S. 305 [hereinafter Paris Convention opened for signature Oct. 31, 1958]; see also Paris Convention revised and amended Sept. 28, 1979, supra note 60; Bogsch, supra note 60.
64 Paris Convention, supra note 60, at art. 5(a)(2), (4).
65 Id.
66 Agreement on Trade-Related Aspects of Intellectual Property Rights art. 1, Apr. 15, 1994, Marrakesh Agreement Establishing the World Trade Organization, Annex 1C, 1869 U.N.T.S. 401 [hereinafter TRIPS].
67 Id.
68 Id.
69 TRIPS, supra note 66, at art. 31(a).
70 Id. at art. 31(b), (k).
71 Except where broader markets must be addressed to remedy anti-competitive practices. Id. at art. 31(c), (f), (i).
72 Id. at art. 31(d), (e), (g).
73 Id. at art. 31(h).
74 Id. at art 31(b), (h).
75 Id. at art. 31.
76 DeRoo, Pier, Public Non-Commercial Use Compulsory Licensing for Pharmaceutical Drugs in Governmental Health Care Programs, 32 Mich. J. Int’l L. 347, 350-52 (2011)Google Scholar (noting that although most compulsory licenses had been issued under the national emergency provision, Thailand had licensed two under the public non-commercial use provision).
77 TRIPS, supra note 66, at art. 31.
78 Id.
79 Id.
80 Id.
81 Members and Observers, World Intellectual Prop. Org., https://www.wto.org/english/thewto_e/whatis_e/tif_e/org6_e.htm [https://perma.cc/C52H-9Y68] (last visited Dec. 15, 2018).
82 7 U.S.C. § 2404 (2018); 35 U.S.C. §§ 203-204 (2018); 42 U.S.C. § 2011 (2018); 42 U.S.C. § 2183 (2018); 42 U.S.C. § 7608 (2018).
83 Paris Convention, supra note 60, at arts. 5(a)(2), (4); TRIPS, supra note 66, at art 31.
84 Paris Convention, supra note 60, at arts. 5(a)(2), (4).
85 TRIPS, supra note 66, at art. 31.
86 7 U.S.C. § 2404; 35 U.S.C. §§ 203-204; 42 U.S.C. § 2011; 42 U.S.C. § 2183; 42 U.S.C. § 7608; Paris Convention, supra note 60, at 5(a)(2), (4).
87 TRIPS, supra note 66, at art 31.
88 Tyler, supra note 25, at 467.
89 Myers Wallace, Brooke, Clarity at Long Last: Post-Verdict Compensatory Patent Infringement Damages, 94 Pat. Trademark & Copyright J. 1309, 1309 (2017)Google Scholar.
90 eBay, Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391 (2006).
91 Id. at 396.
92 Id.
93 Tyler, supra note 25, at 465-66.
94 Hoe v. Knap, 27 F. 204, 212 (C.C.D. Ill. 1886) (nor had the manufacturer received any orders for such presses); see also Ewart Mfg. Co. v. Baldwin Cycle-Chain Co., 91 F. 262, 265 (C.C.D. Mass 1898) (describing unworked patents as “a waste from which the public is sought to be excluded for reasons of which equity takes no cognizance”); Saunders, Kurt M., Patent Nonuse and the Role of Public Interest as a Deterrent to Technology Suppression, 15 Harv. J.L. Tech. 389, 399 (2002)Google Scholar.
95 Albert H. Walker, Text-book of the Law of Patents for Inventors 788 (John H. Hilliard & Eugene Eblé eds., 5th ed. 1917).
96 See Cont'l Paper Bag Co. v. E. Paper Bag Co., 210 U.S. 405, 429 (1908); Walker, supra note 95.
97 Cont'l Paper Bag Co., 210 U.S. at 429; see also United States v. Winslow, 227 U.S. 202, 217 (1913) (noting that “the exclusion of competitors…is of the very essence of the right conferred by the patents”).
98 Walker, supra note 95, at 555-71, 613-20, 785.
99 See eBay, Inc. v. MercExchange, L.L.C., 547 U.S. 388, 393 (2006).
100 Id. at 390.
101 MercExchange, L.L.C. v. eBay, Inc., 275 F. Supp. 2d 695, 698 (E.D. Va. 2003).
102 Id. at 699.
103 Id. at 711.
104 Id. at 712.
105 Id. at 713.
106 MercExchange, L.L.C. v. eBay, Inc., 401 F.3d 1323, 1338-39 (Fed. Cir. 2005).
107 See eBay, Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006).
108 See id. at 395 (Roberts J., concurring) (explaining that historical practice “does not entitle a patentee to a permanent injunction or justify a general rule”). But see Gergen, Mark P., Golden, John M. & Smith, Henry E., The Supreme Court's Accidental Revolution? The Test for Permanent Injunctions, 112 Colum. L. Rev. 203, 205 (2012)Google Scholar (stating that “scholars have said that, before eBay, they were unfamiliar with any traditional four-factor test for permanent injunctions” and that, similarly, no such test was previously found in treatises).
109 eBay, 547 U.S. at 390-391.
110 Id. at 397 (Kennedy, J., concurring).
111 Id. at 396.
112 Id. at 396-97.
113 Id. at 396 (emphasis added).
114 Id. at 396-97.
115 Id. at 396.
116 Id. at 391.
117 Id.
118 Id. at 392-94.
119 Thomas Cotter, Congress Shouldn't Overturn EBay Patent Injunction Standard, Law360 (Sept. 19, 2018, 12:40 PM), https://www.law360.com/articles/1083601/congress-shouldn-t-overturn-ebay-patent-injunction-standard [https://perma.cc/G5UV-CHJM].
120 See Seaman, supra note 30, at 1969.
121 See, e.g., Harish Chander et al., Current Scenario of Patent Act: Compulsory Licensing, 47 Indian J. Pharmaceutical Educ. Res., Jul.-Sept. 2013, at 26, 27; Ho, Cynthia M., Patent Breaking or Balancing? Separating Strands of Fact from Fiction Under TRIPS, 34 N.C. J. Int’l. L. & Comm. Reg. 371, 373 (2009)Google Scholar.
122 See Chander et al., supra note 121, at 28.
123 Wolfgang Hein & Suerie Moon, Informal Norms in Global Governance: Human Rights, Intellectual Property Rules, and Access to Medicines 84 (Nana K. Poku ed., 2013) [hereinafter Informal Norms in Global Governance].
124 Id. at 85.
125 Id.
126 World Trade Organization, Ministerial Declaration of 14 November 2001, WTO Doc. WT/MIN(01)/DEC/1, 41 ILM 746, ¶ 1 (2002) [hereinafter Doha Declaration].
127 Id.
128 Id. ¶ 4.
129 Id. ¶ 4, 5 (emphasis added) (spelling normalized to U.S. practice).
130 Chander et al., supra note 121, at 28.
131 Informal Norms in Global Governance, supra note 123, at 85.
132 P.A. Chinamasa, Zimbabwe Minister of Justice, General Notice 240 of 2002, Declaration of Period of Emergency (HIV/AIDS) Notice 2002, May 24, 2002 (Zim.) (covering a six-month period from May 24, 2002 to November 24, 2002) [hereinafter Declaration of Period of Emergency (HIV/AIDS) 2002]; P.A. Chinamasa, Zimbabwe Minister of Justice, Statutory Instrument 32 of 2003, Declaration of Period of Emergency (HIV/AIDS) Notice 2003, 2003 (Zim.) (covering a five-year period from January 1, 2003, to December 31, 2008) [hereinafter Declaration of Period of Emergency (HIV/AIDS) 2003].
133 Declaration of Period of Emergency (HIV/AIDS) 2002, supra note 132; Declaration of Period of Emergency (HIV/AIDS) 2003, supra note 132.
134 Frank Sacco, Solomon, A Comparative Study of the Implementation in Zimbabwe and South Africa of the International Law Rules That Allow Compulsory Licensing and Parallel Importation for HIV/AIDS Drugs, 5 Afr. Hum. Rts. L.J. 105, 119–120 (2005)Google Scholar.
135 Id. See generally Verichem Pharmaceuticals (PVT) LTD, http://www.varichem.co.zw/ [https://perma.cc/T3BU-XPML] (last visited Jan. 29, 2020) (overview of generic pharmaceutical product offering, local demand, and regional relationships).
136 See Sacco, supra note 134.
137 See id.
138 See id.
139 See id.
140 See Chander et al., supra note 121, at 28.
141 See id.
142 See id.
143 See id.
144 See id.
145 See Informal Norms in Global Governance, supra note 123, at 85.
146 Salvador Namburete, Deputy Minister of Mozambique, Compulsory License No. 01/MIC/04 (2004) (Mozam.).
147 Informal Norms in Global Governance, supra note 123, at 85.
148 Id.; Ho, supra note 121, at 377, 443-44.
149 Ho, supra note 121.
150 Id. at 412-13.
151 Id. at 413.
152 Id. at 414.
153 Access to Medicines: Making Market Forces Serve the Poor, World Health Org., https://www.who.int/publications/10-year-review/medicines/en/ [https://perma.cc/GP3P-T7F4] (last visited Jan. 29, 2020) (“Nearly 2 billion people have no access to basic medicines[.]”).
154 Ho, supra note 121, at 371.
155 See Informal Norms in Global Governance, supra note 123, at 93.
156 See id. at 90-91.
157 See id. at 132-33.
158 See id. at 113-14; see also Doha Declaration, supra note 126, ¶ 6.
159 Informal Norms in Global Governance, supra note 123, at 113-14, 132-33.
160 Id. at 93.
161 Id. at 90, 91; Ho, supra note 121, at 444.
162 See Nicholas Zamiska & James Hookway, Abbott's Thai Pact May Augur Pricing Shift, Wall St. J. (Apr. 23, 2007, 12:01 AM), https://www.wsj.com/articles/SB117727884277678266 [https://perma.cc/HM2L-DMFA] (quoting Abbott CEO Miles White explaining Abbott's reason for lowering the drug price was “in the name of access for patients”).
163 See Ho, supra note 121, at 444-45.
164 Informal Norms in Global Governance, supra note 123, at 62 (noting that inclusion in the Special 301 Report is “widely understood as a precursor to trade sanctions”); Ho, supra note 121, at 447-50.
165 Office of the U.S. Trade Representative, 2007 Special 301 Report 27 (2007) [hereinafter 2007 Special 301 Report]. The Special 301 Report is the Office of the United States Trade Representative's congressionally-mandated annual review of international strength of intellectual property rights.
166 Special 301, Office of the U.S. Trade Representative, https://ustr.gov/issue-areas/intellectual-property/Special-301# [https://perma.cc/5NCW-CNNB] (last visited Jan. 29, 2020).
167 Informal Norms in Global Governance, supra note 123, at 91.
168 See Cameron, Edwin, Patents and Public Health: Principle, Politics and Paradox, 1 SCRIPTed 517 (2004)CrossRefGoogle Scholar.
169 See Ho, supra note 121, at 449.
170 Kommerskollegium [Swed. Nat’l Bd. of Trade], The WTO Decision on Compulsory Licensing: Does it Enable Import of Medicines for Developing Countries with Grave Public Health Problems? 11, 52-56 (2008).
171 Id.
172 Grosse Ruse-Khan, Henning, The International Law Relation Between TRIPS and Subsequent TRIPS-Plus Free Trade Agreements: Towards Safeguarding TRIPS Flexibilities? 18 J. Intell. Prop. L. 1, 3 (2011)Google Scholar.
173 Id. at 7-8.
174 Kommerskollegium, supra note 170, at 11.
175 Id. at 54.
176 Id. at 53.
177 See id. at 57-58.
178 Id. at 11.
179 Id. at 55.
180 Id. at 56-57.
181 Office of the U.S. Trade Representative, 2019 Special 301 Report 5 (2019).
182 Id.
183 Kommerskollegium, supra note 170, at 54-56. “The countries with the ‘worst’ practices that have the greatest adverse impact (actual or potential) on the relevant US products must be placed on the ‘Watch List’ or the ‘Priority Watch List’ and the USTR can withdraw trade preferences if a country on the list does not improve its performance.” Id. at 54-55.
184 2007 Special 301 Report, supra note 165, at 17 (specifying that countries on the Priority Watch List are the subject of increased attention concerning problem areas).
185 Stirner, Beatrice, Learning from Practice: Compulsory Licensing Cases and Access to Medicines, 1 Pharmaceutical Pat. Analyst, 557, 569-70 (2012)CrossRefGoogle ScholarPubMed.
186 Id. at 555.
187 Id. at 556.
188 TRIPS, supra note 66, at art. 31.
189 Doha Declaration, supra note 126, ¶ 6. Whether this Declaration was per se binding has been debated, with the majority agreeing it was. See Ho, supra note 121, at 391.
190 Decision of the General Council, Implementation of Paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health ¶ 2, WTO Doc. WT/L/540/Corr.1 (Sept. 1, 2003).
191 Id. ¶ 3.
192 Id. ¶ 4.
193 Press Release, World Trade Org., Decision Removes Final Patent Obstacle to Cheap Drug Imports (Aug. 30, 2003) (available at https://www.wto.org/english/news_e/pres03_e/pr350_e.htm) [https://perma.cc/8KGN-V4QC]; see also Amendment of the TRIPS Agreement, World Trade Org., https://www.wto.org/english/tratop_e/trips_e/amendment_e.htm [https://perma.cc/BE6G/2DZB] (last visited Jan. 30, 2020).
194 Ramanujam, Padmanabha & Goyal, Yugank, One View of Compulsory Licensing: Comparative Perspectives from India and China, 18 Marq. Intell. Prop. L. Rev. 369, 400-01 (2014)Google Scholar.
195 Id. at 400.
196 Id.
197 Id. at 401 n.134.
198 Id. at 401.
199 Cahoy, Daniel R., Breaking Patents, 32 Mich. J. Int’l L. 461, 484 (2011)Google Scholar.
200 Id.
201 See Monika Shailesh, Fair Remuneration for Compulsory Licensing, Mondaq (Aug. 3, 2017), http://www.mondaq.com/india/x/616430/Patent/Fair+Remuneration+for+Compulsory+Licensing [https://perma.cc/RV7B-BKZ6].
202 See id.
203 But see FM‘t Hoen, Ellen et al., Medicine Procurement and the Use of Flexibilities in the Agreement on Trade-Related Aspects of Intellectual Property Rights, 2001–2016, 96 Bull. World Health Org. 185, 188 (2018)Google Scholar (reporting that TRIPS benefits are utilized much more frequently than the official records suggest, e.g., via declared non-licensed use and use of TRIPS flexibilities in the course of day-to-day pharmaceutical procurement).
204 Carlos María Correa, Compulsory Licensing: How to Gain Access to Patented Technology, in Intellectual Property Management in Health and Agricultural Innovation: A Handbook of Best Practices 273, 276 (Anatole Krattiger et al. eds., 2007); James Love, World Health Org., Remuneration Guidelines for Non-voluntary Use of a Patent on Medical Technologies 5 (2005); Shailesh, supra note 201.
205 See, Correa, supra note 204, at 276; Love, supra note 204, at 8; Shailesh, supra note 201.
206 See Correa, supra note 204, at 274; Love, supra note 204, at 5; Shailesh, supra note 201.
207 See Correa, supra note 204, at 274; Love, supra note 204, at 5; Shailesh, supra note 201.
208 See Correa, supra note 204, at 276; Love, supra note 204, at 8; Shailesh, supra note 201.
209 See discussion infra Section II.B.
210 Paice L.L.C. v. Toyota Motor Corp. (Paice I), 504 F.3d 1293 (Fed. Cir. 2007).
211 Id. at 1296.
212 Id. at 1302-03.
213 Final Jury Instructions at 21-23, Paice L.L.C. v. Toyota Motor Corp., 2005 U.S. Dist. LEXIS 45716 (E.D. Tex. Sep. 28, 2005) (No. 2:04-CV-211-DF).
214 Id. at 21 (instructing jury that “[i]n determining the reasonable royalty, you should consider all the facts known and available to the parties at the time the infringement began”).
215 Paice L.L.C. v. Toyota Motor Corp. (Paice II), 609 F. Supp. 2d 620 (E.D. Tex. 2009).
216 Id. at 622; Paice I, 504 F.3d at 1315.
217 Paice II, 609 F. Supp. 2d at 622.
218 Paice I, 504 F.3d at 1314.
219 Id.
220 Id.
221 Id. at 1316.
222 Amado v. Microsoft Corp. (Amado II), 517 F.3d 1353, 1360 (Fed. Cir. 2008) (noting that “[t]here is a fundamental difference…between the granting of retrospective relief and the granting prospective relief”).
223 Id. at 1360 (emphasis added).
224 Id. at 1362.
225 Paice I, 504 F.3d at 1314-16.
226 Id. at 1314-15.
227 Whitserve, L.L.C. v. Comput. Packages, Inc., 694 F.3d 10, 35 (Fed. Cir. 2012).
228 Erfindergemeinschaft UroPep GbR v. Eli Lilly & Co., No. 2:15-CV-1202-WCB, 2017 U.S. Dist. LEXIS 111425, at *8 (E.D. Tex. July 18, 2017).
229 Paice I, 504 F.3d at 1314-15.
230 Id. at 1315. Nevertheless, negotiation will not be forced upon the parties if they maintain that negotiation would be fruitless. See Erfindergemeinschaft, 2017 U.S. Dist. LEXIS 111425, at *9.
231 Paice I, 504 F.3d at 1315.
232 Amado II, 517 F.3d 1353, 1362 n.2 (Fed. Cir. 2008) (determining that any “any eventual award should fall somewhere between the…amount the jury found to be an appropriate pre-verdict…royalty and the…amount Amado was willing to accept in exchange for a license”).
233 Id. at 1361-62.
234 Amado v. Microsoft Corp. (Amado I), No. SA CV 03-242 DOC (ANx), 2008 U.S. Dist. LEXIS 110152, at *13 (C.D. Cal. Dec. 4, 2008).
235 Amado II, 517 F.3d at 1361.
236 Id. at 1361-62.
237 Erfindergemeinschaft UroPep GbR v. Eli Lilly & Co., No. 2:15-CV-1202-WCB, 2017 U.S. Dist. LEXIS 111425, at *13, *16 (E.D. Tex. July 18, 2017).
238 Id. at *19.
239 Id. at *19.
240 Id. at *14, *16-17.
241 Id. at *14.
242 Id. at *14-15 (noting that a hypothetical negotiation following a trial “would produce a higher royalty rate for the infringement following the verdict, largely because of the fact that any uncertainty as to whether the jury would find infringement or invalidity had been removed”).
243 Id. at *17.
244 See id. at *15; Amando II, 517 F.3d 1353, 1362 (Fed. Cir. 2008) (“When a district court concludes that an injunction is warranted, but is persuaded to stay the injunction pending an appeal, the assessment of damages for infringements taking place after the injunction should take into account the change in the parties' bargaining positions, and the resulting change in economic circumstances, resulting from the determination of liability … as well as the evidence and arguments found material to the granting of the injunction and the stay.”).
245 Erfindergemeinschaft, 2017 U.S. Dist. LEXIS 111425, at *17-18 (quoting Presidio Components, Inc. v. Am. Tech. Ceramics Corp., No. 08-CV-335, 2010 U.S. Dist. LEXIS 79039, at *13 (S.D. Cal. Aug. 5, 2010)).
246 Id. at *18-29 (citing Amado II, 517 F.3d at 1362).
247 Id. at *36-37.
248 Id. at *38-39.
249 Id. at *21.
250 Id. (citing Gregory Sidak, J., Ongoing Royalties for Patent Infringement, 24 Tex. Intell. Prop. L.J. 161, 175-76 (2016)Google Scholar).
251 See id. at *37-39.
252 See Whitserve, L.L.C. v. Comput. Packages, Inc., 694 F.3d 10, 35-36 (Fed. Cir. 2012).
253 See id. at 35-36.
254 Id. at 26 (quoting Lucent Techs., Inc. v. Gateway, Inc., 580 F.3d 1301, 1336 (Fed. Cir. 2009)).
255 Id. at 28-29 (quoting Bluebonnet Sav. Bank, F.S.B. v. United States, 266 F.3d 1348, 1355 (Fed. Cir. 2001)).
256 Id. at 30.
257 Id. (explaining that “[f]or a jury to use a running-royalty agreement as a basis to award lumpsum damages … some basis for comparison must exist in the evidence presented to the jury”).
258 Ga.-Pac. Corp. v. U.S. Plywood Corp., 318 F. Supp. 1116, 1120 (S.D.N.Y. 1970).
259 Erfindergemeinschaft, 2017 U.S. Dist. LEXIS 111425, at *40 (E.D. Tex. July 18, 2017) (first noting Ga.-Pac, 318 F. Supp. at 1120; then explaining Amado II, 517 F.3d 1353 (Fed. Cir. 2008)) (stating that “District courts may, but are not required to, apply the Georgia-Pacific factors to determine whether changes in the parties' legal status or bargaining positions will affect Amado's post-verdict hypothetical negotiation”).
260 Whitserve, 694 F.3d at 27 n.11.
261 McManus, Dan, Incentives Must Change: Addressing the Unpredictability of Reasonable Royalty Damages, 5 Am. U. Intell. Prop. Brief 1, 22 n.121 (2013)Google Scholar (stating that “opinion testimony of qualified experts is simply the source of most of the evidence to be used on the other factors”).
262 Sidak, supra note 250, at 176.
263 Whitserve, 694 F.3d at 30.
264 Paice II, 609 F. Supp. 2d 620, 630 (E.D. Tex. 2009).
265 Id.
266 Id.
267 Id.
268 See Amado I, No. SA CV 03-242 DOC (ANx), 2008 U.S. Dist. LEXIS 110152, at *9 (C.D. Cal. Dec. 4, 2008).
269 Id.
270 Amado II, 517 F.3d 1353, 1362 (Fed. Cir. 2008).
271 Amado I, 2008 U.S. Dist. LEXIS 110152, at *16-32.
272 Id. at *33-34.
273 Id. at *32.
274 Id. at *33.
275 See Seaman, supra note 30, at 1969.
276 See id. at 1988.
277 See id. at 1989 n.247.
278 See id. at 1990-91.
279 See id. at 1952 & n.8 (defining “non-practicing” entities as those that own patents to assert their patents against other companies instead of directly using their patented technology, commonly known as patent trolls).
280 See id. at 1990-91 (defining “non-competitor” entities as patent-owners that do not directly compete with an infringer).
281 See id. at 1989.
282 See id. at 1990-91.
283 See id. at 1981 n.214.
284 Sidak, supra note 250, at 176. Mean and median data are author's calculations.
285 Fresenius USA, Inc. v. Baxter Int'l, Inc., No. C 03-1431 PJH, 2012 U.S. Dist. LEXIS 30949, at *30-31 (N.D. Cal. Mar. 8, 2012), vacated as moot, Fresenius USA, Inc. v. Baxter Int'l, Inc., 721 F.3d 1330, 1347 (Fed. Cir. 2013) (vacating the district court's judgment and remanding with instructions to dismiss in light of the cancellation of Baxter's remaining claims and rendering the pending litigation moot).
286 Id. at *30-31, *45-46.
287 Bos. Sci. Corp. v. Cordis Corp., 838 F. Supp. 2d 259, 275 (D. Del. 2012).
288 Id. at 275-76.
289 Id. at 265, 276.
290 See Sidak, supra note 250, at 175.
291 See id. at 176-77.
292 President's Comm’n for the Study of Ethical Problems in Med. & Biomedical & Behavioral Research, Securing Access to Health Care: A Report on the Ethical Implications of Differences in the Availability of Health Services 16, 17 (1983).
293 Id. at 17.
294 See, e.g., World Health Org., Access to Medicines: Making Market Forces Serve the Poor 16 (2017), https://www.who.int/publications/10-year-review/chapter-medicines.pdf?ua=1 [https://perma.cc/5YY7-KPVG] (“The patent system, with its market-driven R&D incentives, has historically failed to invest in new products for poor populations with virtually no purchasing power, resulting in a paucity of R&D driven by the unique health needs of the poor. Apart from having few new products that address their priority diseases, the poor are punished in a second way: the common practice of recouping the costs of R&D through high prices protected by patents means that those who cannot pay high prices do without.”).
295 See Nicol, Dianne & Owoeye, Olasupo, Using TRIPS Flexibilities to Facilitate Access to Medicines, 91 Bull. World Health Org. 533, 533-34 (2013)CrossRefGoogle ScholarPubMed.
296 Patent Failure, supra note 6, at 16, 140, 144, 152 (2008).
297 Id. at 88-89; see also Kevin J. Hickey et al., Cong. Research Serv., R45666, Drug Pricing and Intellectual Property Law: A Legal Overview for the 116th Congress 1, 27 (2019) [hereinafter Cong. Research Serv., R45666].
298 eBay, Inc. v. MercExchange, L.L.C., 547 U.S. 388, 396-97 (2006) (Kennedy, J., concurring).
299 Patent Failure, supra note 6.
300 Id. at 155.
301 Deangelis, Catherine D., Big Pharma Profits and the Public Loses, 94 Millibank Q. 30, 30 (2016)CrossRefGoogle ScholarPubMed; John Butters, S&P 500 Reporting Record-High Net Profit Margin for Q1 2018, FactSet (Apr. 23, 2018), https://insight.factset.com/sp-500-reporting-record-high-net-profit-margin-for-q1-2018 [https://perma.cc/K7TT-B5EQ].
302 See Patent Failure, supra note 6, at 89; Development & Approval Process: Drugs, U.S. Food & Drug Admin. (Oct. 28, 2019), https://www.fda.gov/drugs/development-approval-process-drugs [https://perma.cc/HK94-Z24M] (drugs cannot be legally sold without FDA approval).
303 Cong. Research Serv., R45666, supra note 297; see also Patent Failure, supra note 6, at 16, 89, 140, 144, 152; Seaman, supra note 30, at 1985.
304 See Correa, supra note 204, at 276; Love, supra note 204, at 5; Ho, supra note 121, at 373, 377, 443-44; Shailesh, supra note 201.
305 See Doha Declaration, supra note 126; Chander et al., supra note 121, at 28.
306 See Disputes by Agreement, World Trade Org., https://www.wto.org/english/tratop_e/dispu_e/dispu_agreements_index_e.htm [https://perma.cc/7M9DUK9D] (last visited Feb. 2, 2020) (providing no example of a challenge to a compulsory license under TRIPS Article 31).
307 Seaman, supra note 30, at 1985.
308 See id.
309 TRIPS, supra note 66, at art. 31.
310 Doha Declaration, supra note 126.
311 TRIPS, supra note 66, at art. 31; see also Doha Declaration, supra note 126; Ho, supra note 121, at 386-87.
312 TRIPS, supra note 66, at art. 31; see also Doha Declaration, supra note 126; Ho, supra note 121, at 386-87.
313 See, e.g., Paice II, 609 F. Supp. 2d 620 (E.D. Tex. 2009).
314 See discussion supra Section II.B.
315 See Seaman, supra note 30, at 1985.
316 See generally TRIPS, supra note 66; Paice I, 504 F.3d 1293 (Fed. Cir. 2007)
317 Erfindergemeinschaft UroPep GbR v. Eli Lilly & Co., No. 2:15-CV-1202-WCB, 2017 U.S. Dist. LEXIS 111425, at *14 (E.D. Tex. July 18, 2017).
318 TRIPS, supra note 66 (article 31 does not include provisions related to patent validity).
319 See Disputes by Agreement, World Trade Org. supra note 306.
320 Erfindergemeinschaft, 2017 U.S. Dist. LEXIS 111425, at *14-15; Amado I, No. SA CV 03-242 DOC (ANx), 2008 U.S. Dist. LEXIS 110152, at *33-34 (C.D. Cal. Dec. 4, 2008).
321 See discussion supra Section II.B.
322 See generally Paice I, 504 F.3d 1293 (Fed. Cir. 2007).
323 See Danzon et al., supra note 16, at 294-95.
324 Schweitzer, Stuart O. & Comanor, William S., Prices of Pharmaceuticals in Poor Countries Are Much Lower than in Wealthy Countries, 30 Health Aff. 1553, 1553, 1559 (2011)CrossRefGoogle Scholar; On-patent Products: How Do Pharmaceutical Companies Use Pricing, Licensing and Donations to Improve Access to Key Medicines?, Access to Med. Found. (Nov. 20, 2018), https://accesstomedicinefoundation.org/access-to-medicine-index/results/on-patent-products-how-do-pharmaceutical-companies-use-pricing-licensing-anddonations-to-improve-access-to-key-medicines [https://perma.cc/8LTN-EGXT].
325 Informal Norms in Global Governance, supra note 123, at 7-8.
326 Id.
327 See, e.g., id. at 86-92; Ho, supra note 121, at 373.
328 TRIPS does not provide, or even recommend, guidelines for determining what would constitute “reasonable commercial terms” under article 31(b). See TRIPS, supra note 66, at art. 31(b).
329 See Correa, supra note 204, at 276; Love, supra note 204, at 5; Sidak, supra note 250, at 176; Shailesh, supra note 201.
330 See Seaman, supra note 30, at 1985.
331 See, e.g., Doha Declaration, supra note 126 (indicating that TRIPS compulsory licenses are intended to increase access to health care).
332 See, e.g., Seaman, supra note 30, at 1989-91 (discussing market competition and injunctions).
333 See, e.g., Doha Declaration, supra note 126 (indicating that TRIPS compulsory licenses are intended to increase access to health care).
334 See Cahoy, supra note 199, at 487; Gifford, Daniel J., How Do the Social Benefits and Costs of Patent System Stack Up in Pharmaceuticals?, 12 J. Intell. Prop. L. 75, 107-08Google Scholar.
335 See Cahoy, supra note 199, at 487.
336 Bos. Sci. Corp. v. Cordis Corp., 838 F. Supp. 2d 259, 263, 275-76 (D. Del. 2012).
337 See, e.g., TRIPS, supra note 66; eBay, Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006); Paice I, 504 F.3d 1293, 1315 (Fed. Cir. 2007).
338 See, e.g., Erfindergemeinschaft UroPep GbR v. Eli Lilly & Co., No. 2:15-CV-1202-WCB, 2017 U.S. Dist. LEXIS 111425 (E.D. Tex. July 18, 2017).
339 See, e.g., Doha Declaration, supra note 126.
340 See, e.g., Danzon et al., supra note 16, at 294-95; Kesselheim et al., supra note 19, at 861, 863.
341 TRIPS does not provide, or even recommend, guidelines for determining what would constitute “reasonable commercial terms” and permits compulsory licensing at arbitrary terms if “such efforts have not been successful within a reasonable period of time.” TRIPS, supra note 66, at art. 31(b).
342 See, e.g., Erfindergemeinschaft, 2017 U.S. Dist. LEXIS 111425, at *40.
343 See supra Section II.A.
344 See Doha Declaration, supra note 126 (confirming humanitarian ends).
345 See Ho, supra note 121, at 419-24.
346 U.S. Food & Drug Admin., Ctr. for Drug Evaluation and Research, Generic Competition and Drug Prices: New Evidence Linking Greater Generic Competition and Lower Generic Drug Prices 2-3 (2019) [hereinafter Generic Competition & Drug Prices]; Jaime R. Hornecker, Generic Drugs: History, Approval Process, and Current Challenges, 34 U.S. Pharm (Generic Drug Rev. Supp.) 26 (2009).
347 Generic Competition & Drug Prices, supra note 346; Hornecker, supra note 346.
348 See Rachel Silverman et al., Ctr. for Glob. Dev., Tackling the Triple Transition in Global Health Procurement: Promoting Access to Essential Health Products through Aid Eligibility Changes, Epidemiological Transformation, and the Progressive Realization of Universal Health Coverage 38 (2019).
349 See id. at 15-16, 35-36, 38-39.
350 See id.
351 See id. at 38.
352 See id.
353 See id. at 4.
354 Paris Convention, supra note 60, at art. 5(a)(2), (4); Bogsch, supra note 60, at 36-37.
355 Ho, supra note 121, at 412-13, 417.
356 See Lichtenberg, Frank R., Pharmaceutical Companies' Variation of Drug Prices Within and Among Countries Can Improve Long-Term Social Well-Being, 30 Health Aff., 1539, 1539 (2011)CrossRefGoogle ScholarPubMed.
357 See, e.g., Correa, supra note 204, at 276; Love, supra note 204, at 5; Sidak, supra note 250, at 176; Shailesh, supra note 201.
358 See, e.g., Ho, supra note 121, at 414-15 (noting the Thai official position that Thailand was free to issue compulsory licensees under TRIPS without prior negotiation).
359 See, e.g., id. at 412-17; Shailesh, supra note 201.
360 See, e.g., Erfindergemeinschaft UroPep GbR v. Eli Lilly & Co., No. 2:15-CV-1202-WCB, 2017 U.S. Dist. LEXIS 111425, at *40 (E.D. Tex. July 18, 2017).
361 Ga.-Pac. Corp. v. U.S. Plywood Corp., 318 F. Supp. 1116, 1120 (S.D.N.Y. 1970).
362 Id.
363 See discussion supra Section II.B; Seaman, supra note 30, 1989-91, 2002.
364 See Seaman, supra note 30, at 1989-91, 2002.
365 See id.
366 Paice I, 504 F.3d 1293, 1315 (Fed. Cir. 2007).
367 See Erfindergemeinschaft UroPep GbR v. Eli Lilly & Co., No. 2:15-CV-1202-WCB, 2017 U.S. Dist. LEXIS 111425, at *13, *16 (E.D. Tex. July 18, 2017).
368 See id. at *21.
369 See e.g., Amado II, 517 F.3d 1353, 1360 (Fed. Cir. 2008); Erfindergemeinschaft, 2017 U.S. Dist. LEXIS 111425, at *9, *40.
370 See Sidak, supra note 250, at 177.
371 See id.
372 See Amado II, 517 F.3d at 1362; Erfindergemeinschaft, 2017 U.S. Dist. LEXIS 111425, at *40.
373 See, e.g., Whitserve, L.L.C. v. Comput. Packages, Inc., 694 F.3d 10, 28 (Fed. Cir. 2012); Ga.-Pac. Corp. v. U.S. Plywood Corp., 318 F. Supp. 1116, 1120 (S.D.N.Y. 1970).
374 See TRIPS, supra note 66, at art. 31(i), (j).
